CLOSURE OF CAPITAL GAIN ACCOUNT SCHEME-1988

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CLOSURE OF CAPITAL GAIN ACCOUNT SCHEME-1988

CAPITAL GAIN

Query 1]

I had opened capital gain account after the sale of my house and the amount deposited in the account has been used by me for the flat under construction. I have been told by bank to get the application of closing account signed by the IT department of concerned circle which for me is Bhandara but they failed to understand and directed me to get it done at Nagpur with a request application which I deposited there and I was told I shall get the document by post duly signed. For the last one month I did not get it and I have proof of deposition of application with me. How can I get my account closed now please advise. [cjddhar@sify.com]

Opinion:

CBDT Notification No. GSR 724(E) dated 22/06/1988 contains the salient features of Capital Gain Accounts Scheme-1988. Under Rule 13 of the said scheme, the account can be closed by submitting an application in Form G to the bank. The Form G needs to be approved by the concerned Assessing Officer of the Assessee. Without approval of the Assessing Officer, bank will not be able to close the account. For the general benefit, we have uploaded the Capital Gain Account Scheme-1988 at www.nareshjakhotia.blogspot.com. You may please further represent before your Assessing Officer with the copy of the Scheme as mentioned above.

Query 2]

Banks are accepting Fixed Deposits from the Customer and pay the same on its Maturity with Interest.

We are accepting FDR’s with Quarterly Compounding Interest and mentions Maturity Amount as per Quarterly Compounding [Subject to TDS]. As per Bank’s Definition, Quarter means April to June, July to Sept, Oct. to Dec & Jan to Mar. But one of our Valued Customers is insisting Quarter means three months from the date of Initial Deposit according to TDS & requested to deduct tax at source on that basis only. If we do calculations by above two methods, there is some Difference in payment of Interest. FDR is for One Year [Quarterly Compounding, (Principal + Interest) to Paid on Maturity date].

As per as Bank’s Calculation is concerned, Interest is being Credited, there is a Difference in First Quarter and Last Quarter as the same is bifurcated, Less amount [Interest – TDS] is Credited to FDR Account in First Quarter and accordingly the Difference is continued. My query is, is there any Provision as far as Income Tax Act is concern, regarding which Quarter is to be considered i.e. April – June, July to Sept, Oct. to Dec & Jan to Mar Or Three Months from Initial Deposit + 3 Months + 3 Months + 3 Months.  Please guide me. [2milind.joshi@gmail.com]

Opinion:

  1. TDS provisions are very simple & crystal clear as far as the timing of tax deduction at source is concerned. The tax at source is required to be deducted at source the time of
    -Credit or
    – Payment
    whichever is earlier.
  2. Depending upon the mode that is adopted by the payer, the TDS would be required to be done. The TDS mechanism totally relies on the method for interest payment/credit followed by the Deductor. In your case, the moment you account for the interest entries, the TDS provision would apply.

Query 3]
I am a salaried person & new at share trading.  My income from salary is Rs. 2,35,036/-, Deduction permissible is Rs. 54,982/-, Net income after deduction is Rs. 1,80,054/- (2,35,036 – 549,82). I have bought and sold some share in financial year 2011-12 in which I earn a short term capital gain Rs. 1,100/- & a short term capital loss of Rs. 435/-. My queries are:
  1. What will my capital gain?
  2. Do I have to show it in form 16?
  3. If yes, in which column and how to calculate tax? [pravin_chandankhede@yahoo.com]

Opinion:

  1. Your net taxable short term capital gain in the FY 2011-12 is Rs. 665/-
  2. You could have reported it to your employer to include it in Form No. 16. Even if it is not reported or included in Form No. 16, you can consider the same & pay the tax on it while filing your income tax return.
  3. STCG is required to be shown in “Schedule-TI”, “Schedule-CG” in the ITR-2. It is taxable at a special rate of 15% u/s 111A of the Income Tax Act -1961 even though your other income remains in the tax slab of 10%.

CAPITAL GAIN


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